Questions and Answers

The Support Economy:
Why Corporations Are Failing Individuals And The Next Episode Of Capitalism

by Shoshana Zuboff And James Maxmin

A: In the last fifty years, a new society of individuals has emerged. There has been a psychological reformation as powerful and decisive as the religious reformation of the sixteenth century. Today's individuals seek psychological self-determination. They are the origins of their own meanings, not a passive mass audience. This new phenomenon is expressed in myriad ways, from the success of the Vietnam Memorial Wall to the proliferation of laws extending human rights in every domain. The new individuals have plenty of things. As consumers, they now yearn for the kind of support that will enable them to live the lives they choose.

People's desires, needs and wants have radically changed, but corporations have remained distant and indifferent to the true nature of this change. As a result, we have a business environment in which people are chronically disappointed and frustrated by their experiences as consumers and employees. We no longer trust large organizations to serve our needs. On every level, we are experiencing a divisive "us vs. them" mentality. Now, after decades of being forced to put up with the consequences of corporate indifference, individual end consumers are striking out on their own to blaze new trails in a new approach to consumption that we call the individuation of consumption. They are pointing us toward the next leap forward in wealth creation that we call the support economy.

Q: Does this mean that managerial capitalism is at the end of its useful life?

A: Yes. A century ago mass consumption was on the rise. People wanted more things. The answer was to produce more goods at an ever lower cost-mass production. Corporations were organized around a managerial hierarchy invented to provide a tight inward focus on the increasingly complex processes of production and distribution. This was a massive innovation over the older model of a single owner who tried to oversee everything. Under managerial capitalism, ownership became dispersed, but control remained concentrated in the management group.

Management's inward focus allowed it to succeed beyond anyone's dreams. But that success further insulated managers from the society they were supposed to serve. The elite hierarchy and the self-interested male culture of management became a central focus. This organizational narcissism not only produced the Enron effect, but it cost managers a front row seat in the new society of individuals and thus the dramatically different yearnings and needs of its own end consumers, especially the women among them. It also prevented them from grasping the revolutionary potential of the new digital medium. As a result, corporations have failed to adapt to the true nature of their markets in the twenty-first century. Organizational change programs, visionary leadership, or increased regulation can not fix this situation. The problem runs deep in the structure of managerial capitalism.

Q: Do the shortcomings of today's managerial capitalism imply a more general crisis of capitalism?

A: No. The evolution from one episode of capitalism to another is a normal historical process. Just as mercantile capitalism was displaced by proprietary capitalism, and that new form was later displaced by managerial capitalism, it makes sense that managerial capitalism will be displaced by a new more comprehensive form that better serves today's populations. Capitalism's capacity to evolve and its incredible versatility have proven to be the single most important source of its robustness and success. In fact, capitalism has avoided devastating crises not because it is permanent, but because it changes. Each historical episode of capitalism has a limited range of adaptation, however. As markets and technologies undergo historic change, so too must the current model of capitalism.

Q: Under what conditions do new episodes of capitalism emerge?

A: Each new episode of capitalism emerges from the complex interplay of three forces: (1) New human yearnings that create a new approach to consumption and new kinds of markets, (2) technologies capable of addressing the demands of the new markets, and (3) a new enterprise logic that can link employees, technologies, and markets in new ways.

Q: Do these conditions exist today?

A: Yes. First, today's people are pioneering a new approach to consumption that we call the individuation of consumption. They want to be treated as individuals, not as anonymous transactions in the ledgers of mass consumption. They want to be heard and they want to matter. They no longer want to be the objects of commerce. Instead, they want corporations to bend to their needs. They want to be freed from the time-consuming stress, rage, injustice, and personal defeat that accompany so many commercial exchanges. They seek advocacy in place of adversarialism, relationships in place of transactions. They want to take their lives in their own hands and they are willing to pay for what we call the deep support that will enable them to do so. Deep support, as we describe in our book, is not just an enhanced version of conventional customer service. It is an entirely new way of doing business, a radically different approach to the realization of value in which the very purpose of commerce is redefined around the objective of supporting individuals.

Deep support enables psychological self-determination. It produces time for life. It facilitates and enhances the experience of being the origin of one's life. It recognizes, responds to, and promotes individuality. It celebrates intricacy. It multiplies choice and enhances flexibility. It encourages voice and is guided by voice. Deep support listens and offers connection. It offers collaborative relationship defined by advocacy. It is founded on trust, reciprocity, authenticity, intimacy, and absolute reliability. Second, there is a new digital medium whose networked intelligence, flexibility, ubiquity, and complexity make it ideally suited to meeting the demands of the new markets for deep support. Until now, though, it has been bent to the purposes of the old consumption, according to the principles of the old capitalism. The new medium will not fulfill its historic destiny without a new enterprise logic capable of liberating its revolutionary potential.

The fire is laid. What's needed is the match. These conditions create the urgent need for a third force-- a new enterprise logic capable of marrying the new markets for deep support and the new digital medium. We call this new enterprise logic distributed capitalism. Watch the flames when these three forces finally combine. That will mark the real discontinuity between the economy of the twentieth century and that of the twenty-first.

Q: What is distributed capitalism?

A: We need to compare the new model we call "distributed capitalism." with the old form of "managerial capitalism." The key here is where value is located. With the old model, organizations create value on the inside through the production and distribution of goods and services. The organization and its top management are at the center of the commercial solar system. In the new model of "distributed capitalism," the concept of value is totally inverted. Value is not created by organizations, but instead resides with individual end consumers, based on what they require to satisfy their needs on their own terms. The role of the new enterprise is not to create new value but to realize the value that already sits with individuals lodged in their unique needs. This shift of focus is crucial to understand what we are proposing in The Support Economy.

Once you locate the source of value in the individual and not in the corporation, everything changes. The entire way we think about wealth creation, ownership, and control changes. We compare this shift in thinking to the great political and social revolutions of the 18th century, when people went from being merely subjects to becoming full citizens. We see this as the same kind of revolution - the consumer will no longer be a corporate subject. In this new vision, the individual is now the source of all value and all cash. This distribution of value also means the end of the corporation and industrial sectors, as we know them. It leads to what we call the distributed imperative, as it necessitates new ways of distributing ownership and control across what we call federated support networks that are fundamentally aligned with the interests of the individual end consumer.

Q: What is the support economy?

A: The support economy relies upon the new enterprise logic of distributed capitalism, in conjunction with the new digital medium, to provide the deep support that the new individuals really want. The provision of deep support is the new higher order purpose of commerce-more complex because it includes, but goes beyond, the production and distribution of goods and services.

Federated support networks are the new competitors. They integrate a wide range of enterprises that combine to offer a distinctive approach to deep support, along with a range of goods and services. Individuals get back control of their lives, while federations assume accountability and responsibility for every aspect of the consumption experience. In this way, cash buys responsibility, advocacy, and relationship, not just transactions.

Q: Is deep support merely a new convenience for the wealthy?

A: No, emphatically not. Individuals at every income level need deep support. In fact, in today's environment wealthy people can paste together some version of deep support to enhance their lives. But everyone else-working single moms, dual career couples, blue-collar families-have urgent needs for deep support. That is why a critical component of the new enterprise logic is what we call infrastructure convergence. We argue that federations can use digital platforms to eliminate the replication of administrative activities across their enterprises. This dramatically reduces working capital and provides the opportunity for order of magnitude shifts in the cost structure of deep support. Deep support can be made available at any level of depth and in any configuration at prices that everyone can afford. The only thing that stands in the way of infrastructure convergence today is the old enterprise logic of managerial capitalism and the ways in which it prescribes organizational boundaries and antiquated conceptions of ownership.

Q: Is the idea of a support economy a utopian vision? Is it simply too good to be true?

A: If you had described today's world to any five reasonable people sitting around a table in the year 1910--before the real consolidation and diffusion of the then revolutionary new enterprise logic called managerial capitalism-- they would have dismissed that description as utopian. The levels of education, health, recreational activity, living conditions and affordable goods that a majority of people in the developed world enjoy today would have seemed truly outlandish. Similarly in today's world, a support economy seems too good to be true because it is interpreted through the lens of the now outdated enterprise logic of managerial capitalism. People have learned to expect adversarialism from corporations, and corporations have learned that they can get away with indifference, neglect, and exploitation of their end consumers.

In our book we argue that fundamental shifts in the nature of capitalism occur with the convergence of three forces: new markets, new technologies, and a new enterprise logic. These three forces converged early in the twentieth century and gave rise to managerial capitalism. The relevant question is "are these three forces converging again now?" We think the facts suggest the possibility of exactly such an historic convergence. There are new populations with a deep yearning for psychological self-determination and they are giving rise to the new markets for deep support that we describe. There is a new digital medium uniquely capable of meeting the demand associated with these new markets. Finally, many people today sense that there must be a better and more relevant way of doing capitalism. The search is on for a new enterprise logic that will fundamentally alter the orientation, purpose, and economics of commerce.

We hope that our book will contribute to that search, and help propel the convergence of these three critical forces. Once new commercial entities figure out how to realize the value in the new markets for deep support, everyone who wants a share of the new wealth will have to follow. The rest will go the way of the buggy manufacturers of a century ago.

Q: You mentioned the male/female divide under managerial capitalism. Are there specific implications for the sexes in the support economy?

A: The Support Economy tells an important story about sexual politics and the economic role of women. From the beginning of managerial capitalism, production was identified as a male undertaking, while consumption was seen as primarily female. In the standard enterprise logic, male producers are at the center of the commercial solar system and all other constituencies orbit around that center. End consumers are in the furthest orbit. But the well-documented contempt that producers often exhibited toward end consumers also had a decidedly misogynist tone. This antagonism contributed to the isolation of male managers in their male culture and kept women at bay as end consumers. The women who made it on the inside were required to adapt to career norms based on the biological and social realities of the men who ran corporations a century ago. This is how misogyny contributed to organizational narcissism and cost corporations a foothold in the new sources of wealth creation based on the new markets for deep support

Women and dual career couples at every income level are the epicenter of these new markets. The advocacy and support they demand will require enterprises that identify with their experiences and champion their needs. In this way, women are a primary force in the support economy both as the vanguard of a new consumption and as the leaders of a new kind of "production".

Q: How did you come to write this book?

A: Shoshana Zuboff: After the publication of In The Age of the Smart Machine, I started a research project at Harvard Business School tracking companies that were considered the leading innovators, companies with vision, resources and skilled leaders well-versed in the latest trends in management. In every case, I saw that their plans ran into trouble and visions could not be implemented. I asked: "Why is it so difficult to make this work?" and "What are the underlying issues that prevent these companies from being truly successful?" Over the next ten years, I refrained from publishing and immersed myself in these questions. During that time my family and I had plenty of frustrating, and even victimizing, experiences as end consumers, which were impossible to reconcile with the public rhetoric of management. It gradually became clear to me that the old enterprise logic had outlived its usefulness and trying to repair the existing framework would not work. Little that I had once believed about modern organizations and modern capitalism was useful. I set aside most of my assumptions and went back to square one. I read history. I asked the questions that are too often undiscussable in my field. In the process, I began to understand the momentous economic consequences and potential of the new society of individuals. Jim and I recognized that the new society necessitated a revolutionary inversion, in which the individual, rather than the corporation and its products, is recognized as the source of all value. That became the foundation for a new conception of commerce and led to the many years of work on this book.

A: Jim Maxmin: Throughout my managerial career, I have been mostly involved in turnarounds. I passionately believed in serving customers, but 99% per cent of my time was focused on operational issues and meeting earnings targets. Major issues around customer satisfaction and retention could only be given lip service, especially in the early years. There was talk of the "customer relationship", but the overall pressure was to deliver earnings every six months.

As Shoshana introduced me to a deeper understanding of the historical forces that have shaped business, I began to understand why my efforts were frustrated. We realized that what was needed was a radical new approach to doing business. The Support Economy was born out of long study, but it also expresses our vision of that new world. It is my hope that my experiences and our insights will be valuable to the next generation of management.

Q: What do you hope to accomplish with this book?

We want to initiate discussion and debate, to propose a new framework for thinking about the future of our economy and society. We desperately need society-wide invention to bring us into the next phase of economic growth. We can't do it locked into outdated structures and organizations. We are not offering a blueprint or template or easy prescription. We don't believe there is one formula. In The Support Economy, we are presenting a new way to think about people and their needs, to change the way we value one another, and to reorient the very purpose of commerce. In doing this, we present a model that can help ignite the next episode of capitalism and so inaugurate a vast new wave of wealth creation for the next century.